An Economic Model Is Useful If It

question 54

Multiple Choice

An economic model is useful if it

• A)includes every detail of reality
• B)involves no unproven assumptions
• C)is expressed in equations
• D)makes accurate predictions
• E)is simple enough to be understood by a child

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance.

Average Cost

A method of inventory costing, or determining an investment's cost, by taking the total cost of items and dividing it by the total number of items.

Capital

Refers to the financial resources that businesses use to fund their operations and growth.

Firm Value

The total worth of a company, determined by factors like its assets, earnings, and market perception.